Nissan predicts sudden drop in Leaf sales this summer

A steep drop last month of about 33% in sales of Nissan’s Leaf electric vehicle compared to the previous year is just one aspect of the automaker’s problems. After July 1, the up to $5,000 state tax credit for EV purchases in Atlanta, Georgia, will be withdrawn. This is a significant blow as Atlanta is known to be the Leaf’s biggest market.

Monthly Leaf sales are likely to fall to 5 to 8 units beginning in July compared to about 100 currently, according to Scott Middleton, sales manager at Town Center Nissan in Kennesaw, Ga. In addition, a wave of Leafs will soon come off lease with reduced resale value. The automaker has started offering a $5,000 credit for lease customers to purchase their cars at the end of the lease period.

Fred Diaz, Nissan senior vice president for U.S. sales, marketing and operations, said that while many will grab this opportunity, it won’t turn things around. He said that the low gasoline price in the U.S. is the immediate problem of battery-powered cars. Nissan has had to tackle numerous challenges in its campaign to launch and market the Leaf.

For example, the company worked to give education to new consumers on this technology, urging cities and power firms to invest in public charging stations, and proving to skeptics that the battery-powered Leaf can be a long-term solution to more stringent regulatory demands for zero-emission vehicles.

What hurt Nissan’s campaign is the cost of U.S. retail gasoline dropping below $3 a gallon and consumers buying up large SUVs and trucks in the past few months. However, the brand benefits from the shift to bigger vehicles.

From January to May of this year, Nissan Division reported a 2.6% increase in sales cars and trucks to 557,960 units. For this period, truck sales went up 17%. Last month, dealerships sold 2,104 Leafs, a 33% decline from May 2014.

Leaf sales from the start of the year through May dropped 26%. Diaz puts the blame on cheaper gasoline. The Leaf doesn’t use gas or oil. Similarly, sales of the Toyota Prius hybrid -- one of the most fuel-efficient nameplates in the industry – decreased by 27% in May.

However, Diaz also pointed out that Leaf sales will be hurt by the termination of Georgia's up to $5,000 EV tax credit -- which Georgia residents can get aside from a federal $7,500 tax credit for EV purchases.

The Leaf has a base price of $29,860 (including shipping). Diaz told Automotive News that the company has yet to predict “how severe the impact will be.”